Rick Gates Testifies Against Former Mentor Paul Manafort in Special Counsel Trial

Clay Curtis
August 7, 2018

A day after testifying against longtime boss Paul Manafort, Rick Gates returned to the witness stand Tuesday as the government's star witness in the financial fraud trial of President Donald Trump's former campaign chairman. Gates, who also served on Trump's campaign, pleaded guilty in February and agreed to cooperate with prosecutors under a deal that could lead to a reduced sentence.

Prosecutors summoned Gates, described by witnesses as Manafort's "right-hand man", to give jurors the first-hand account of a co-conspirator they say helped Manafort carry out an elaborate offshore tax-evasion and bank fraud scheme.

He said he was aware Mr Manafort was acting as an unregistered foreign agent in lobbying for Ukraine.

"Gates is going to do and say whatever the prosecutors want him to say, which is why I wouldn't believe a word that comes out of his mouth", Kerik said in a Tuesday morning tweet.

Gates admitted in court that he embezzled hundreds of thousands of dollars from Manafort, and that he knowingly committed crimes at the behest of his former partner.

Manafort also told him to wire some of his political consulting income to his bank accounts in the United States, Gates added.

"Did you commit any crimes with Mr. Manafort?" the prosecutor asked.

Finally, before the court recessed for lunch, Gates said that he helped Manafort convert a $1.5 million 2012 loan from Peranova Holdings into income while applying for a loan in 2016. The testimony came in a trial that started last week, brought by special counsel Robert Mueller's investigative team, that charges Manafort hid $30 million earned for work in Ukraine.

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The US Department of Justice has said more than $4bn was misappropriated by high-level officials from the fund and their associates.

Mr Mueller is also investigating possible coordination between Trump campaign members and Russian officials in the election campaign, but the charges against Mr Manafort do not address that.

Laporta detailed multiple examples in which Manafort and Gates sought to doctor financial records, first in order to lower Manafort's taxable income and then later to inflate his income so that he could get bank loans.

Testimony from Mr Manafort's tax preparer continued on Monday. And there was a reason why prosecutors wanted Gates to paint himself in such a negative light on the witness stand: they wanted to get everything out in the open and demonstrate that at this point, Gates is hiding nothing and is coming clean about his crimes. The funds were logged as loans, but Gates testified they were in fact compensation to Manafort. Laporta said she had no indication that the loan from Deripaska had been paid off.

Notably, after urging prosecutors to speed things along as jurors heard from 14 witnesses last week, U.S. District Judge T.S. Ellis III said late on August 3 that Downing could begin his questioning of Laporta on Monday and wouldn't rush him.

And if Manafort did indeed open those accounts, that inherently means he knew they existed - and that he failed to report them to his tax preparers.

But Mr Manafort is not charged with helping the Kremlin.

Laporta said she had grown to distrust the information Gates was providing her, though she didn't know about the embezzlement.

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